Apple Pay just launched in the UK - here's what you need to know

Apple Pay has officially landed in the UK, the wallet’s first market outside of the US. Here is the latest information and its impact:

Apple Pay’s UK retail footprint is sizable: As of day one, Apple Pay is accepted at 250,000 locations in the UK. That’s the same number of acceptance locations at launch in the US, but the UK has fewer retailer locations in total which means that Apple Pay actually has higher penetration. Early merchants include BP, McDonald’s, Starbucks and Transport for London.

Some cardholders may have trouble using it: Only seven UK banks currently allow their cards to be loaded onto Apple Pay. Some of the largest banks, including HSBC and Lloyds Bank, won’t accept Apple Pay until later in the year. And heavyweight Barclays only just announced via Twitter that it plans to support Apple Pay “in the future.” This could mean that Apple Pay will ramp up slowly on the consumer side.

Braintree merchants will be able to use Apple Pay: Braintree, the PayPal-owned payment processor, has expanded Apple Pay support to merchants in the UK, enabling them to add Apple Pay as a checkout option on their apps. This could help Apple Pay build a foundation in mobile commerce in the region. Apple Pay is already supported by major apps in the UK such as Five Guys, Zara and YPlan.

A new partner in the restaurant industry: MyCheck, a mobile payments provider for UK restaurants, now supports Apple Pay. This will give patrons the ability to settle their bills using MyCheck’s iOS app or one of their partners’ apps. This could catch on quickly since it solves a clear customer pain point, namely, waiting around for a server to process a cash or card payment.

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Apple’s biggest hurdle — transaction value limits — will be overcome soon. Currently, contactless terminals without the latest processing software can’t accept Apple Pay transactions above £20. However, Visa Europe expects that 80% of the UK’s contactless terminals will be upgraded to accept Apple Pay transactions of any amount by the end of the year. And presumably the remaining 20% of terminals would belong to smaller merchants that don’t see heavy foot traffic.

Higher transaction permissions will give Apple Pay a distinct advantage over contactless cards. Contactless cards are popular in the UK, and arguably are one of Apple Pay’s biggest competitors. The UK leads Europe with 49.6 million Visa-branded contactless cards in circulation, meaning there are 0.77 of these cards per capita. Visa Europe will likely process over 631 million contactless transactions in the UK from March 2015 through March 2016. However, contactless cards have a transaction limit of £20 that will rise to just £30 this fall. As more merchants lift their limits for Apple Pay transactions, iOS users might ditch contactless cards for Apple Pay in large numbers.

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